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Home News Power Sector News Fertiliser, power firms switches to naphtha due to steep fall in price

Fertiliser, power firms switches to naphtha due to steep fall in price

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Kayamkulam Thermal power station of NTPCAfter a long period, naphtha again seems to be back in the reckoning as a viable feedstock for players in the power and fertiliser sectors.With sharp decline in its prices, producers feel that the product is poised for significant growth in the coming months.This is despite the fact that the petrochemical sector, where naphtha is normally used as a feedstock, is going through a downswing. According to industry sources, the urea production units of many fertiliser companies  which were closed mainly on account of viability issues pertaining to the high cost of naphtha, could be up for revival measures. FACT was in a financial crisis when naphtha prices were sky rocketted. Now they will be able to run their urea plant at optimum capacity.

“Naphtha is certainly more affordable now, so we are increasing the usage of liquid fuel in our dual-fired power plants. Our naphtha-based Kayamkulam plant in Kerala is now being run at over 90 per cent plant load factor, compared to 60-70 per cent earlier,” an NTPC official said. Besides, NTPC’s Kawas, Gandhar and Anta have the dual-fuel option and can be run on naphtha.

A litre of naphtha currently costs Rs 20 (down more than half from its peak). In the international market, too, naphtha prices have almost come down to spot prices of liquefied natural gas (LNG) — between $7 and $7.5 per million British thermal unit.

At Rs 34 a litre , diesel is almost Rs 14 higher than current naphtha prices. Fertiliser users have already started switching to naphtha, while power sector players, having gas stations with dual firing, are also moving to the cheaper feedstock. The cost of naphtha has dropped to its lowest since February 2007 and the rupee has fallen by over 15 per cent against the dollar since August, prompting users to switch to the domestically produced liquid fuel than imported LNG.

Naphtha consumption saw a growth of 2.3 per cent (0.79 million tonnes) in November as against the same month last year. The cumulative growth for April-November has been 0.7 per cent (5.8 mt). As opposed to this, LNG sales in November have seen a decline of almost 15 per cent to 0.6 mt (0.7 mt).In 2007-08, naphtha sales had come down by nearly 15 per cent to 8.8 mt, largely replaced by LNG, the consumption of which grew by 28.9 per cent.

Diesel, which has significant usage in the transport sector, saw a growth of 8.8 per cent year-on-year in November at 4.5 mt and a cumulative growth (April-November) of 10.7 per cent.

While naphtha may have become cheaper, power units, especially smaller ones, are still cautious in investing in naphtha infrastructure.This is mainly because of the fluctuations in naphtha price trends and also the need for investment in separate storage facilities for storing the product.

Courtsey- Hindu Businessline

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